Company/supplier communication process have developed over time to provide human facilitation as much as possible. Suppliers have placed their plants strategically near their customers, and have encouraged the temporary placement of employees at each others plants. They have scheduled frequent meetings to address cost, quality, and delivery issues. Table 9.3 describes of these communication process changes with use of the Internet for the supply chain, a process referred to as e-supply.
One result is the increase of virtual meetings using the Internet, involving smaller groups or engineer-to-engineer interactions, and a decrease in the bigger meetings involving larger groups discussing scheduled topics such as quality, performance, or design reviews. By making data available on-line, suppliers can quickly discuss pertinent engineering issues and update their performance indicators for remote access by their customers.
Tooling suppliers can communicate the latest information about hard tooling and suggested improvement to designs. One electronic company was able to reduce monthly trips to their plastic and tooling supplier in Asia from once per month to once per quarter, using Internet-based, engineering data collaborative systems. Given that the project manager and two engineers traveled each month, the savings could be substantial over the lifetime of the development project, which is estimated at 18 months.
Using the same communications technology, small design service companies can enhance their services by augmenting their competency with connections to their own supply chain to provide design, analysis, tooling, and production capabilities. In this manner, a design service company with less than a dozen engineers can deliver global design and manufacturing resources to Fortune 500 companies.
With the advent of Internet-based engineering communications, ECO processing could change from days to hours, given that all parties in the supply chain can communicate effectively and in real time using advanced engineering-based communication tools. This will help companies in the supply chain improve their services by reducing scrap as well as purchasing the proper materials on time.
Supply chain management involves the outsourcing of all of the control and communication issues for a large portion of the design and/or manufacturing of a new product to one or a small number of major suppliers. This supplier in turn can outsource some of the subcomponents of the system to a subcontractor with a special competency in a particular component or subsystem. If not managed properly, suppliers are free to achieve the lowest cost by subcontracting some of their design and manufacturing to the lowest bidder worldwide, with possible negative consequences.
The management of the supply chain in many companies is through the commodity management model. The companies retain control of the supply chain by identifying commodity engineers and managers (usually former production staff from manufacturing operations that were shut down) to manage the supply chain by commodity or discipline. This model is very inefficient, as the information to the supply chain has to be distributed, then funneled through these individuals. This causes delays and bottlenecks, especially when there are engineering changes and quality issues. The commodity managers tend to stay focused on their own commodity disciplines and not have a broad overview of problems and their possible impact on other areas. The sequential supply chain model, first practiced by the auto industry, involved a hierarchy of suppliers called tiers. The OEM company manages the tier-one suppliers, who in turn manage several tier-two suppliers and so on until the third tier. These relationships are shown in Figure 9.5. The communication system to manage all of the information for the total supply chain is very important, so that all elements of the supply chain can instantly react to quality problems and engineering changes to rectify them.
It is readily apparent that the complexity of a high-technology products increases as the assembly level increases. At the same time, it is normal to expect that a subsupplier to another supplier would possess little or no electronic or high-technology comprehension or knowledge. In fact, most of the subsuppliers would not recognize or fully appreciate what their products might be used for. This lower level of competence is contrasted with the need for much more quality at the assembly level, and is of most concern for the product system test, where in-depth knowledge of system requirements such as cabling and interfacing with other electronic products is required. A well-managed supply chain is required to ensure conformance and quality within all of the supply chain links, and to limit the depth of the link to a maximum of three levels of tiered suppliers.